Fitch upgrades Malta’s credit rating to A+ with a stable outlook

Following Standard and Poor’s credit rating upgrade in October of last year, Fitch has now upgraded Malta’s sovereign credit rating from A to A+ with a stable outlook.

In a statement, finance minister Edward Scicluna said the upgrade reflected the progress of the last four years on various priority sectors, in particular the consolidation in public finances.

The credit rating institution defines one of the main contributors to this upgrade as the ‘fast declining gross general government debt’ which is expected to ‘decrease to 50% of GDP in 2019...supported by strong nominal GDP growth and recurrent primary surpluses.’ Fitch added that it also expects government-guaranteed liabilities to decline in the coming years.

Another main driver contributing to the upgrade was the positive turnaround in the fiscal balance, where the government successfully turned years of fiscal deficits into a fiscal surplus last year. Fitch expects Malta to continue achieving a fiscal surplus in the coming years, which, it added, reflects the government’s efforts to improve tax collection and tax revenue; reduce unnecessary expenditure on social benefits and ease pension pressures; and support higher robust economic growth.

Fitch said it expects the Maltese economy to continue growing at a faster pace than that of similarly rated countries, fueled by the solid performance of Maltese exports, notably in the services sector, a dynamic labour market,and investment. The latter is expected to pick up in 2019, boosted by the gradual absorption of new EU funds and the launching of large transport, health, and education projects.

Malta’s rating upgrade also reflected Malta’ large net external creditor position. Fitch expects Malta’s external position to remain strong, where the current account surplus is expected to increase to well over 7 per cent in the 2017-2019 period.

Minister for Finance Edward Scicluna said: "Government’s vision for Malta is turning into reality, in that Malta is becoming a solid top performer in economic growth, employment growth, and sound public finances. All this is being confirmed by the rating agencies."